Research published on 12 October 2022 by Pensions UK, the industry body, finds that without reform more than 50% of savers will fail to meet the retirement income targets set by the 2005 Pensions Commission1. The report, Five steps to better pensions: time for a new consensus, sets out five recommended steps for pension reform1.
The body states that automatic enrolment has already improved outcomes, but that further change is needed1.
"Without policy intervention, most people in the UK will retire with inadequate pension income. Our report sets out five steps for pension reform."
The report follows earlier work on retirement income adequacy, including the 2017 consultation that proposed a set of national retirement income targets to stimulate public debate on adequacy and guide public policy1. Pensions UK says the 2022 report builds on feedback to its Hitting The Target consultation1.
Among the positions the body has taken in related work: it has called for the automatic enrolment 2017 Review recommendations to be implemented and for a move to 12% per annum contributions, while noting the timetable would need to be put back to navigate the cost of living crisis1. It has also said that a State Pension age of 68 is already high enough compared with other OECD countries1. Government reforms to automatic enrolment, so that people save from the first pound of pension saving and from age 18 rather than age 22, are described by Pensions UK as welcome but insufficient on their own1.
The five steps themselves are not set out in the text of the page reviewed here; the report is listed in the body's document library1. A final report, Five Steps to Better Pensions: Final Report, was published on 16 October 2023, a year after the 2022 report, and states that if all the proposals are implemented and the State Pension Triple Lock is maintained, people on all income levels will have an improved income in retirement1. A Better Pensions Charter followed on 18 October 2023, described as a commitment from the pensions industry, stakeholder groups and policymakers to support a framework for pensions policy1.
Why it matters for households
The finding concerns people saving into workplace pensions through automatic enrolment, the mechanism that enrols eligible workers into a scheme and sets minimum contributions. On Pensions UK's assessment, more than half of savers are on course for a retirement income below the targets set by the 2005 Pensions Commission1. The measures discussed would change how much is paid in and from when: contributions at 12% per annum, saving from the first pound earned and from age 18 rather than 221. Those changes would affect the amount deducted from pay and the amount built up over a working life. The State Pension age is a separate question: Pensions UK has said 68 is already high enough compared with other OECD countries1. Anyone wanting to see all their pension pots in one place may in future use pensions dashboards; the body's wider work sits within its pensions policy programme.
What happens next
The 2022 report was followed by the final report on 16 October 2023 and the Better Pensions Charter on 18 October 20231. Pensions UK says it will continue working with members and the industry to build a consensus on a better pensions framework1. No implementation timetable for the five steps is given in the page reviewed here.
Sources1 cited
- Improving pensions adequacy plsa.co.uk
Pension WiseFree guidance on your options for a defined contribution pension, from age 50
FSCSProtects your money if a bank, insurer or investment firm fails
GOV.UKOfficial information on tax, benefits and government services